Income Tax Ordinance (XLIX of 2001)‑‑‑

‑‑‑‑S.122(5)‑‑‑Income Tax Ordinance (XXXI of 1979),S.138‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Amendment of assessment‑‑‑Incorrect assessment‑‑ Department from the very beginning conceded that `mal‑administration' had been committed and assessment was made incorrectly ‑‑‑Regional Commissioner of Income Tax found ,himself helpless to amend ‑the same on the ground that there was no corresponding provisions for S.138 of the repealed Income Tax Ordinance, 1979 in the new Income Tax Ordinance, 2001 and, in fact, power of revision was withdrawn by omission of section 135 of the Income Tax Ordinance, 2001 which was initially enacted in the new Ordinance‑‑‑Validity‑‑‑Provision of S.122 of the Income Tax Ordinance, 2001 confers wider power on the Regional Commissioner than were available in the repealed Income Tax Ordinance, 1979, now an assessment order where (a) the Ordinance was incorrectly applied, or (b) definite information acquired from an audit or otherwise that the assessment was incorrect, could be amended by. The Commissioner‑‑‑Department itself having accepted that the assessment was incorrect, there should be no difficulty in invoking the powers conferred by subsection (5) of S.122 of the Income Tax Ordinance, 2001 to remedy the situation‑‑‑Federal Tax Ombudsman recommended that Commissioner to conduct an inquiry as already proposed in the respondent's reply and pass consequential order under S.122 of the Income Tax Ordinance, 2001.

Complainant in person.

Zafar Abbas, A.C.I.T. for Respondent.

DECISION/FINDINGS

The complaint relates to the assessment years 2000‑2001 and 2001‑2002 and alleges excessive assessment in disregard of the fact that the shop was dislodged by the Military Authorities for reasons of encroachments.

2. The respondent's reply, dated 17‑5‑2002 conveys that in view of the constant decline in declared income, it was thought necessary to ascertain factual position of business for which the Commissioner proposed discreet inquiry under his own supervision where after, if necessary, suo motu power of review would be exercised to rectify the situation.

3. The complainant who appeared personally explained that ignoring the declared income, filed at Rs.15,000 for 2000‑2001 and a mere Rs.6,000 for 2001‑2002, the Assessing Officer completed assessments determining income at Rs.70,000 for 2000‑2001 and Rs.75,593 for 2001‑2002. It was explained that the Military Authorities removed certain encroachments and, resultantly, the complainant's business premises was evacuated. The new place, now allotted, is not favourably located and, therefore, the business is constantly on the decline to which no regard was shown by the Assessing Officer. To support his stand the complainant submitted copies of various representations filed by him to the Administrator of the Municipality and to the Nazim of the Tehsil Council in which the other shop owners of the new area were joint petitioners.

4. The Representative of the Revenue on his turn admitted that the Commissioner desired to vacate the impugned assessments, as conveyed in respondent's reply, 'but found himself helpless because there is no corresponding provisions for section 138 of the repealed Ordinance in the new Income Tax Ordinance, 2001 and, in fact, power of revision was withdrawn by omission of section 135 which was initially enacted in the new Ordinance. The D.R. supported his arguments by bringing on record letter, dated 3‑8‑2002 addressed by the R‑CIT, Central Region, Multan to Member (Direct Taxes), C.B.R., Mr. Vakeel Ahmad seeking clarification on this issue.

5. The investigation shows that the Department from the very beginning, concedes that "maladministration" has been committed and is willing to rectify of the wrong. It is surprising that the concerned officers have not given thought that action, as could be taken under section 138 of the repealed Ordinance or section 135 of the new Ordinance is possible under subsection (5) of section 122 of the Income Tax Ordinance, 2001 which reads as under;‑‑‑

Section 122. Amendment of assessment.‑‑‑‑

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(5)An assessment order shall only be amended under subsection (1) and an amended assessment shall only be amended under subsection (4) where the Commissioner‑‑‑

(a)is of the view that this Ordinance has been incorrectly applied in making the assessment (including the misclassification of an amount under a head of income, incorrect payment of tax with the return of income, an incorrect claim for tax relief or rebate, an incorrect claim for exemption of any amount an incorrect claim for a refund); or

(b)has definite information acquired from an audit or otherwise that the assessment is incorrect.

In fact the above section 122 confers wider powers than were available in the repealed Ordinance. Now an assessment order where (a) the Ordinance is incorrectly applied, or (b) definite information acquired from an audit or otherwise that the assessment is incorrect, can be amended by the Commissioner. Since, in the present case the Department, itself accepts that the assessment is incorrect, there should be no difficulty in invoking the powers conferred by subsection (5) of section 122 to remedy the situation. It is, therefore, recommended that:‑‑

(i)Commissioner to conduct an inquiry as already proposed in the respondent's reply.

(ii)Pass consequential order under section 122 of the Income Tax Ordinance, 2001.

6. Compliance report be submitted within 30 days of the receipt of this Order.

C.M.A./490/FTOOrder accordingly